Saturday 20 December 2008

Car Prices Drop 0.8pc on Softening Demand

Prices for passenger vehicles on the mainland fell 0.8 per cent last month as dealers fought to win customers in the slowing vehicle market, but analysts said they did not expect a further decline.

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Guanyu said...

Car Prices Drop 0.8pc on Softening Demand

Kandy Wong and Bloomberg
19 December 2008

Prices for passenger vehicles on the mainland fell 0.8 per cent last month as dealers fought to win customers in the slowing vehicle market, but analysts said they did not expect a further decline.

Car prices dropped 0.3 per cent from a year earlier, said Cheng Xiaodong, head of the vehicle price monitoring arm of the National Development and Reform Commission. Sport-utility vehicle prices declined 1.6 per cent.

Toyota dealers in Shanghai cut Camry prices by as much as 13 per cent last month, according to Sina.com.

“Dealers will try their best to meet annual sales targets during the peak selling months [October and November] by offering incentives,” said Mr Cheng. “But the room for further price cuts is pretty limited as carmakers have to ensure a certain amount of profit.”

Honda dealers in Jinan, Shandong, cut Civic compact prices 11 per cent last month, according to Sina.com.

Chery Automobile lowered the price of its A5 cars by as much as 11,000 yuan (HK$12,500).

Carmakers slashed prices 2.1 per cent in the first nine months as demand cooled and competition increased.

But not everyone was reducing prices.

“The price of Honda’s Accord in Beijing rose recently after the price cut during the golden week holiday,” said one driver. “Also, carmakers like Toyota and Honda are beginning to ease up on their dealers, so they may not be under great pressure to meet the annual sales target in the last month of the year.”

Average vehicle prices are expected to fall by about 5 per cent this year due to oversupply, according to the NDRC’s estimate early this year. Prices dropped an average of 4 per cent last year.

Amid the weak market, at least four carmakers - Anhui’s Jianghuai Motor, Chery Automobile, Changan Ford Mazda and Dongfeng Peugeot Citroen - cut their staff, sources said.

Industry-wide passenger car production fell 13 per cent last month to 533,600 units, according to China Association of Automobile Manufacturers.

The government is considering implementing tax policies as ways to boost car sales.

Carmakers, such as SAIC Motor Corp, have said they will further develop their financing arms to encourage more drivers to buy vehicles on credit.